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rrance and America 

Their Mutual Interests 
and Obligations 



Guaranty Trust Company 
of New York 



France and America 

Their Mutual Interests 
and Obligations 



• « 



Guaranty Trust Company of New York 

V. 

140 Broadway 

PARIS OFFICE FIFTH AVENUE OFFICE LONDON OFFICE 

Rue des Italiens, 1 & 3 Fifth Avenue and 43d Street 32 Lombard Street, E. C. 






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COPYRIGHT, 1917 
GUARANTY TRUST COMPANY' OF NEW YORK 



AUG 27 i9!7 



^ClA472799 



France and America 



Announcement 

For over twenty years the Guaranty Trust 
Company of New York has maintained an 
office in London, at 32 Lombard St., E. C. 
To the foreign trade of the United States 
this office has been of value. The progress 
it has made and the magnitude of its opera- 
tions are but a reflection of the rapid develop- 
ment of the parent company in New York. 
The Company has now opened a similar office 
in Paris at Nos. 1 & 3 Rue des Italiens. This 
location is very close to the Grand Boule- 
vards and about midway between the Bourse 
and the Place de 1' Opera, the two centres of 
business activity in Paris. The Paris offices 
of the Trust Company will have, as close 
neighbors, the Credit Lyonnais, the Banque 
de r Union Parisienne, the Banque Nationale 
de Credit, the Credit Mobilier, and the 
Banque Union de Moscou. 

131 



The offices of the American Consul General 
are located in the same building, which adds 
an important convenience. Adjoining is the 
office building of "Le Temps" one of the lead- 
ing and well-known newspapers of Paris. 

With a frontage of 81 feet and a propor- 
tionate depth, the Paris quarters are spacious 
and convenient. Their equipment is thor- 
oughly modern and includes a safe deposit 
and safe custody department. 

Alexander Phillips, who has served as the 
Paris representative of the Trust Company 
heretofore, and who has a broad grasp of 
foreign business conditions and of French 
banking laws and Customs, is in charge of 
the new office. G. Hebmann, who has been 
manager of the leading French branches 
of the Comptoir National d'Escompte de 
Paris serves as Sub-Manager. William G. 
Wendell, formerly in charge of the New 
England bond business of the Trust Com- 
pany, serves as Secretary, with Richard 
P. Staigg as his assistant. Robert Bienz and 
B. Avegno, from the London office, have 
charge of departments in Paris, and Olaf 

[4] 



Giese is the Chief Accountant. The system 
of accounting and auditing followed in the 
Paris office will conform to that used in the 
main office and all its branches. B. G. Smith, 
the Auditor of the Trust Company, went to 
. Paris and perfected plans to this end. 

Through the establishment of this branch, 
it is believed that another important link has 
been forged in the chain of friendly and mutu- 
ally profitable relations between French and 
American banks and business houses. It will 
enable the Guaranty Trust Company to 
handle a large volume of business with 
France, and, after the war has come to an 
end, to develop the existing commercial re- 
lations between the two republics. Ameri- 
can business concerns and individuals having 
interests abroad will find it to their advant- 
age to estabhsh banking relations with the 
Paris office of the Guaranty Trust Company, 
as will American citizens traveling abroad or 
serving with the armies in France. 

Conscious of America's debt to France, and 
of the friendly ties enduring between the 
nations for more than one hundred years — 

[5] 



ties which time only strengthens — we deem 
the occasion fitting to mention a few of the 
many services we owe to France, and to 
sketch briefly some of her achievements in 
industry, commerce, and finance. 

Guaranty Trust Company of New York 



[6 



France and America 



Between America and France, separated by 
an ocean but united by their common love 
of liberty, justice, and humanity— ever the 
ideals of peoples of real strength— the friend- 
liest, the most fraternal relationship has been 
maintained for nearly a century and a half. 

The liberty that America has enjoyed for 
one hundred and forty years, France helped 
her to achieve. The swords of Lafayette and 
Rochambeau, aided by the guns of De Grasse 
upon the high seas, assisted in cutting the 
foreign ties that bound the American colonies 
prior to the War for Independence; and from 
the private purse of King Louis himself came 
the first loan to America — unsecured and un- 
conditional—to finance that historic under- 
taking. It was with entire justice that 
Washington wrote to Rochambeau; "To the 
generous aid of your nation and to the 
bravery of its sons is to be ascribed in a very 
great degree that independence for which we 
have fought." 

[7] 



France Was Our Sponsor 

Following the decisive victory at Yorktown — 
impossible without the assistance and co- 
operation of Washington's French allies on 
land and sea — which virtually ended the War 
for Independence, came the treaty of Ver- 
sailles in 1783. It was this treaty which 
organized and created the United States of 
America; and it was a French sloop which 
brought to Boston the first announcement of 
its execution. Thus, France, having helped 
us to win our independence, gave us a friendly 
asylum in which to conclude our terms of 
peace. She did more: she stood sponsor for 
us upon our entry into the sisterhood of 
nations; was the first European state to re- 
ceive a diplomatic representative from our 
shores; and similarly, was the first to recog- 
nize our national dignity by sending to us a 
representative from her Court. 

Always America's Friend 

When in 1803 the United States desired to 
purchase from France the city of New Or- 
leans, Napoleon the Great ceded us the whole 

[8] 



Louisiana Territory with its enormous re- 
sources, thus giving us access to the Carib- 
bean Sea and to the Pacific Ocean, and mak- 
ing ours the lands that now form the vast and 
fertile plain west of the Mississippi. The 
acquisition of this territory was of inestimable 
significance in the development of the nation; 
after the Revolution itself and the Civil War 
perhaps the most significant event in our 
history. Again, in 1812, though not directly 
allied with us, France indirectly aided us. 
And in 1898, following the close of the Span- 
ish-American War, from France came the 
overtures for peace, and Paris was again the 
scene of the treaty which concluded matters. 
Thus, in 1783, 1803, 1812, and 1898, France 
participated in the most momentous acts of 
our national existence. This continuity of 
goodwill and service emphasizes the close, 
intimate, and deep sympathy which unites 
the two peoples. 

The Nation's Capitol of French Design 

It was a French engineer, Major L'Enfant, 
who had fought and bled for us during the 

[9] 



War for Independence, who was commis- 
sioned by President Washington to prepare 
a plan for the building of our Federal city, 
after that undertaking had been decreed by 
Congress on July 16, 1790. Major L'Enfant 
did this work with conspicuous ability and his 
plans were closely followed though he did not 
live to see realized the city of his dreams. 
However, on April 28, 1909, his remains were 
removed from their previous resting place and 
reinterred in the Arlington National Ceme- 
tery with fitting ceremonies, in which the 
President of the United States, Representa- 
tives of Congress, the Supreme Court, the 
Society of the Cincinnati, and other patriotic 
organizations, participated. 

Reciprocal Courtesies 
Thirty years ago the people of France gave 
to the people of the United States the colossal 
figure of Liberty which stands on Bedloe's 
Island in New York harbor. There, raised 
high above the waters of the harbor and 
looking out toward the open sea, flaming 
torch in hand, the great statue welcomes 
the traveller visiting our shores and the im- 

[10] 



migrant seeking refuge in free America. 
Later, moved to an expression of our undying 
appreciation of a French gentleman and a 
hero, the people of the United States gave 
to the people of France a monument to the 
memory of Lafayette, which was unveiled in 
Paris on July 4, 1900. The ceremonies upon 
this occasion were imposing and dignified, 
and the event united yet more closely the 
sister republics of America and France. 

The deeply rooted sense of attachment 
existing between the peoples of France and 
America was again manifested when the 
United States welcomed Marshal Joffre, 
former Premier Viviani, and the French 
Commission on their memorable visit to 
this country shortly after our entrance into 
the European War. Everywhere they were 
acclaimed with the wildest enthusiasm. To 
the American public they typified the soul 
of heroic France, and the great, generous 
heart of Columbia beat with affection for 
them. This visit, in the unity of feeling it 
expressed, was one of the most significant 
events in the history of two peoples. 

[11] 



The emotions awakened here by Joffre 
and Viviani were equalled only by those 
aroused by General Pershing and his staff 
when they arrived in France as the vanguard 
of the United States Army — the harbingers 
of America's might come to the rescue of 
France and Democracy. 

Liberty and Democracy Unite Us Today 

The points of sympathy between France and 
America are too many to enumerate, but 
the spirit of liberty and its resultant democ- 
racy are, today as always, the major ideals 
of both nations. Seeking no victories but 
those of peace, no territory except their own, 
no sovereignty except sovereignty over 
themselves, — the independence and equal 
rights of the weakest member of the family 
of nations are to the people of the United 
States and of France entitled to as much re- 
spect as those of the mightiest empire. In 
defense of these principles, France is engaged 
in a death struggle with militant autocracy 
and ruthless aggression and it is not surpris- 
ing to learn that she has loaned to her allies 

[12] 



and to other friendly states 7,000,000,000 
francs with which to further the cause of 
democracy. It is in keeping with America's 
traditions that since the date on which we 
formerly aligned ourselves with France and 
her allies in the great struggle, our Govern- 
ment has loaned to France $370,000,000. 

Genius, Industry, and Thrift 

Until the outbreak of the war in 1914, France 
was busy and prosperous. Then followed an 
upheaval. Any study of her past, however, 
particularly since 1871, shows her ability to 
recuperate rapidly from losses inflicted by 
war, and reveals clearly her industrial 
strength, and her financial elasticity. Suffer- 
ing the loss of Alsace and Lorraine in 1870- 
1871, with 1,600,000 inhabitants, she was 
deprived of two fertile provinces of great eco- 
nomic importance and value. This loss was 
valiantly sustained, and the financial and in- 
dustrial dislocations attendant upon the 
Franco-Prussian campaign were speedily com- 
posed. Her creative genius, the great re- 
sources of her soil, her application to industry, 

[ 13 ] 



and her thrift explain her rapid recuperation 
and progress. 

Wealth, Gold, and Savings 

These things make for the remarkable sta- 
bility of the wealth of France. In 1869 it was 
estimated at about 185 milliards of francs; in 
1871 at 175 milliards of francs; in 1878 at 216 
milliards of francs and in 1914, before the 
outbreak of the war, at 287 milliards of francs. 
The valuation of her income, according to 
competent authorities, rose successively from 
12 milliards of francs in 1853, to 22 milliards 
of francs in 1878, to 28 milliards of francs in 
1903, and to 32 miUiards of francs in 1914. 

Immediately prior to the war, France had 
a gold stock equalhng $1,200,000,000 and a 
stock of silver aggregating $411,100,000. Of 
gold, silver, and paper, her per capita allot- 
ment amounted to $48.63, which was more 
than 25% in excess of the per capita of gold, 
silver, and paper for the United States in the 
corresponding period; more than twice that 
of the United Kingdom of Great Britain and 
Ireland; approximately two and one-half 

[14] 



times that of Germany; and more than four 
times that of Austria Hungary. 

With a population of 39,600,000 at the 
beginning of 1913, France had in postal and 
private savings banks accounts of 14,578,897 
depositors, with aggregate deposits equivalent 
to $1,091,303,658. On June 30, 1915, the 
United States had only 11,811,169 depositors 
out of a population of 101,740,000. Thus, 
almost 40% of the people of France work for 
the future and accumulate for posterity, 
against only 11% for this country. 

Basis of Nation's Strength 

The financial solidarity of the French republic 
is to be ascribed to three influences: first, a 
thoroughly sound banking system, central- 
ized in one of the greatest banking institu- 
tions of the world, the Bank of France; sec- 
ond, the ingrained thrift and frugality of the 
French people as a whole, together with a 
national economic vigor not elsewhere sur- 
passed; third, wise supervision, and pa- 
triotic cooperation by the government with 
banking and business interests. The Franco- 

[15] 



Prussian war of 1870-1871 taught the French 
people the meaning of thrift and economy. 
So well did they learn this lesson, that the 
whole sum of the indemnity demanded by 
Germany, aggregating $1,000,000,000, was 
raised within the republic's confines by its 
own inhabitants and paid off more than one 
year before the time stipulated by the 
Germans. 

French Loans Popular 

The habit thus acquired has never been for- 
gotten by the French, and today the aggre- 
gate number of investors purchasing the 
French war loans has reached the amazing 
total of 4,500,000 individual subscribers. 
Perhaps no other country, in proportion to its 
population, can make so good a showing. 
France is particularly fortunate in that her 
small investors prefer "safe" investments 
rather than offerings which promise high 
returns. Government Rentes or Consols in 
France are perpetual, and this characteristic 
seems to obtain for them increasing favor in 
the eyes of the French people. 

[16] 



National Credit 

One of the clearest evidences of the loyal way 
in which the French people stand behind the 
nation in its financing, is the heavy over- 
subscription which has marked the issue of 
many of its loans. As an illustration, the 
loan of 1872, for 3,500,000,000 francs at 5%, 
brought in subscriptions for 43,816,096,551 
francs; and the loan of 1891, for 939,480,000 
francs at 3%, resulted in a total subscription 
of 16,000,000,000 francs. The government 
policy of issuing its loans in small denomina- 
tions makes for their popularity and wide- 
spread distribution. In the French ledger 
of public debt for 1913, holders of 3% Rentes 
totaled 4,443,904 and of these only 14,231 
held allotments in excess of 1,000 francs. 
Those who held income warrants for 3 francs 
numbered 107,447; for 5 francs, 250,539; for 
20 francs, 395,613; and for 30 francs, 663,747. 
This unusual tendency of the French people 
contributes largely to the stability of prices 
of government securities and to the low rate of 
interest on the public debt: from 1873 to 1901 
the rate did not exceed 3 }/2%- 

[ 17 ] 



Loan Price Recoveries 

Moreover, the government does its part to 
warrant and retain the confidence of the 
holders of its securities. One of its wise 
poKcies is to impose new taxes to defray the 
interest charges on new security issues. It 
began this practice after the Franco-Prussian 
War, and is today following the same rule in 
regard to securities issued to finance the pres- 
ent conflict. This continuity of purpose, 
doubtless, will prove reassuring to all holders 
of French government securities. Under 
this method of procedure the French liberat- 
ing loans of 1870-1871, previously referred to, 
issued at 82.5 and 84.5, respectively, showed 
a high price of 93.4 and a low of 85 in 1873, 
went to a high of 106.4 and a low of 99.6 in 
1875, and reached a maximum of 120.8 in 
1880 with a low of 115.3. Similarly, the 3% 
Rentes which had dropped to 50.3 in March, 
1871, reached par in 1892 and sold five years 
later at 105.2. 

All these facts and figures reveal in differ- 
ent ways the solidarity of French finance. 
To sustain the credit of their nation is almost 

[18] 



a religion with the French people. It is, 
therefore, with no sense of discouragement 
that those who know France best look to her 
future. 

^^ Industries de Luxe^' 

There is another aspect of the genius of 
France which justifies this optimism: her 
splendid aptitude for industrial activities, and 
her resulting position in the industrial 
world. 

Industrial development in France for more 
than a century shows an amazing diversity. 
This compels her to import large quantities 
of raw material, which are converted into 
manufactured products of great value. No 
other country approaches France in the art- 
istic perfection of many of her exports, and 
for this reason France enjoys a practical 
monopoly of the "industries de luxe." Ac- 
cordingly, because of the artistic nature of 
her products, the "quality rather than quan- 
tity" element in her manufactures, a rela- 
tively smaller export tonnage earns a greater 
profit than is the case with her competitors 

[19] 



exporting coal, other raw materials, or ordin- 
ary manufactured products. To France be- 
longs the special and highly profitable privi- 
lege of supplying to other countries "objets de 
luxe" which cannot be produced elsewhere. 
To America come many exports of this class, 
and so long as the demand persists for French 
fashions and French porcelains, for the 
silks of Lyons and the delicate scientific in- 
struments of Paris, the commercial relations 
between the United States and France will 
be a source of pleasure on the one side and 
profit on the other. 

Industrial Progress 

In judging the industrial status of any na- 
tion, its production and consumption of coal, 
iron, and steel, and the growth of its trans- 
portation systems are highly significant fac- 
tors. 

Coal 

In 1869, French industries consumed 21 
million tons of coal, of which 13.5 millions 
were taken from home mines. In 1912, the 

[ 20 ] 



consumption was 61 million tons, of which 41 
million tons were taken from home mines. 

Iron and Steel 

In 1869, the French output of cast iron was 
1,380,000 tons, and of steel, 1,060,000 tons. 
In 1914, France produced 5,311,000 tons of 
cast iron and 4,635,000 tons of steel. 

Railways 

The increasing activity of her railway 
system is similarly demonstrable. In 1869, 
there were in France 10,743 miles of railroad 
track; in 1912, there were 31,546 miles. 

Navigation and Tonnage 

Between 1869 and 1912, inland navigation 
increased 150%; while the traffic of her mer- 
cantile marine had amazingly expanded. 
The tonnage entering French ports in 1869 is 
set down as 11,000,000 tons. In 1912, this 
had been increased to 53,000,000 tons. 

Our Exports to France 
Our official records show that, as early as 
1790, the United States exported to France 
merchandise valued at $1,384,246. By 1833 

[21] 



this valuation had been increased to $13,705,- 
915. In 1866, merchandise shipped to France 
from the United States was valued at $51,- 
312,103; and in 1880, when the hundred- 
million dollar mark was crossed for the first 
time, our shipments to our sister republic 
were valued at $100,063,044. Since 1907, 
our annual exports to France from this coun- 
try have always exceeded $100,000,000, rising 
in 1915 to the then unprecedented total of 
$369,397,170 and in the following year mount- 
ing still higher,— to $628,851,988. 

Our Imports From France 

The values of imports from various coun- 
tries to the United States were not officially 
recorded prior to 1820. For the year 1820- 
1821, our imports from France were valued at 
$4,125,292. By 1830, this valuation had 
almost doubled, the total reaching $7,659,- 
869. In 1860, French imports to America 
were valued at $43,171,413, and in 1890 at 
$77,622,311. For 1910, the figures record a 
gain of approximately 84%, the total valua- 
tion for that year's imports standing at 

[22] 



$132,363,346. In 1914 (the year of the war's 
outbreak), imports from France to this coun- 
try totaled $141,446,252. In 1915, this total 
was practically cut in half, the figures being 
$77,158,740. But for 1916 a surprising 
gain is recorded — French imports to America 
rising to $102,077,060. A nation that can 
achieve such a commercial recovery while her 
territory is being ravished by the invader, 
possesses recuperative powers which justify 
the belief that she will emerge from the 
present conflict prepared to meet and solve 
triumphantly the problems which confront 
her. 

The commercial and industrial record of 
France, following past wars, indicates that 
she should recover quickly from the de- 
struction inflicted in the present conflict. 
The reconstruction of railroads, the erection 
of factories to replace those destroyed, and 
the replacement of the mechanism of indus- 
trial activity that will be required, and that 
is in part alread}^ planned, offer a peculiarly 
inviting field to American capital and enter- 
prise. Tentative steps have already been 

[23 1 



taken by representatives of American engi- 
neers and business men in this work. Aside 
from its attractive business aspect, the en- 
listment of American money and effort in the 
great task of reconstruction that will remain 
at the end of the war will tend to cement still 
more closely the ties that bind the two great 
Republics together, and will enable Americans 
to discharge in part the debt they owe to 
France for her friendly interest in the wel- 
fare and progress of the United States from 
the beginning of its life as a nation. 

August 9, 1917 



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LIBRARY OF CONGRESS 



030 268 115 6 



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